Many an attorney has commented when completing the malpractice insurance application that they refer out or case share cases that they normally do not handle. While a referral or sharing a case can be in the best interest of the law firm and client be cautious about making sure you document the relationship. Over the years we have worked with a number of law firms that had been referring clients to other firms only to have an attorney malpractice claim filed against them for something the other law firm did. I do not know how many times I have been told not to worry about the ‘Med Mal’ work, because the attorney refers it all to a firm that specializes in ‘med mal’.
Any time a law firm shares a case with another attorney or refers the case out to another firm, the original law firm continues to have exposure for this case. Numerous courts have allowed plaintiff attorneys when pursuing attorney malpractice claims to name all attorneys and law firms that have touched the case. The plaintiff attorney is simply pursuing the ‘deep pocket’ theory, looking for any and all insurance coverage that might be related to the malpractice claim.
It is important to document the referral with the client through a written agreement that spells out the referral or case sharing arrangement. Even if the attorney is not taking a referral fee have your client signed a referral agreement stating that you are not representing the client in this matter, nor are you recommending the other attorney and you have no involvement in the case. You should consult your local bar for the appropriate wording and forms for your jurisdiction.
If you are case sharing or referring cases to other attorneys at a very minimum require that the referring firm have attorney malpractice coverage with the limits and deductible that you are comfortable with given the referred matter. Get a copy of the declarations page showing limits, deductible and prior acts dates annually.
The better practice is to annually get a certificate of insurance showing your firm as a certificate holder on the referred to law firm’s malpractice insurance. The advantage of being a certificate holder is if the coverage is cancelled during the policy term, the certificate holder should be notified.
Don’t let your firm’s insurer be the ‘deep pockets’ for a claims settlement. It will cost you in the end.